SolarEdge Announces Fourth Quarter and Full Year 2021 Financial Results

Rhea-AI Summary

SolarEdge Technologies (SEDG) reported record revenues of $551.9 million for Q4 2021, a 54% increase year-over-year. The solar segment contributed $502.7 million, reflecting strong demand. GAAP net income for the quarter was $41.0 million, with a GAAP diluted EPS of $0.74. For the full year, revenues reached $1.96 billion, marking a 34.6% increase from 2020. However, gross margins showed a decline, with a GAAP gross margin of 32.0%. The company forecasts Q1 2022 revenues between $615 million and $645 million.

Positive

• Record Q4 2021 revenues of $551.9 million, up 54% YoY.
• Full year revenues reached $1.96 billion, up 34.6% YoY.
• Solar segment revenue hit $502.7 million in Q4, up 54% YoY.
• GAAP net income for the year was $169.2 million, up 21% YoY.
• GAAP diluted EPS increased to $3.06 for the full year.

Negative

• GAAP gross margin dropped to 29.1% in Q4, down from 32.8% previous quarter.
• Operating expenses rose by 13% in Q4 compared to the prior quarter.

MILPITAS, Calif.--(BUSINESS WIRE)-- SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy technology, today announced its financial results for the fourth quarter and full year ended December 31, 2021.

Fourth Quarter 2021 Highlights

• Record revenues of $551.9 million
• Record revenues from solar segment of $502.7 million
• GAAP gross margin of 29.1%
• Non-GAAP gross margin of 30.3%
• Gross margin from solar segment of 32.8%
• GAAP net income of $41.0 million
• Non-GAAP net income of $62.8 million
• GAAP net diluted earnings per share (“EPS”) of $0.74
• Non-GAAP net diluted EPS of $1.10
• 1.92 Gigawatts (AC) of inverters shipped

Full Year 2021 Highlights

• Record revenues of $1.96 billion, up 34.6% year over year from 2020
• Record revenues from solar segment of $1.79 billion
• GAAP gross margin of 32.0%
• Non-GAAP gross margin of 33.5%
• Gross margin from solar segment of 36.4%
• Record GAAP net income of $169.2 million
• Record Non-GAAP net income of $272.9 million
• Record GAAP net diluted earnings per share (“EPS”) of $3.06
• Record Non-GAAP net diluted EPS of $4.81
• 7.2 Gigawatts (AC) of inverters shipped

“We are ending 2021 with record revenues for the quarter and for the year,” said Zvi Lando, Chief Executive Officer of SolarEdge. “The global demand for solar energy across all segments and geographies is extremely strong and generating unprecedented demand for our products. In particular, we are excited about the strong momentum of the commercial market and the increasing rate of adoption of our innovative technology within this segment. Our focus is to ensure customers have the products they need to execute their projects and we are enabling this by ramping production in multiple sites and navigating supply chain and logistic challenges.”

Fourth Quarter 2021 Summary

The Company reported revenues of $551.9 million, up 5% from $526.4 million in the prior quarter and up 54% from $358.1 million in the same quarter last year.

Revenues from the solar segment were $502.7 million, up 5% from $476.8 million in the prior quarter and up 54% from $327.1 million in the same quarter last year.

GAAP gross margin was 29.1%, down from 32.8% in the prior quarter and down from 30.8% in the same quarter last year.

Non-GAAP gross margin was 30.3%, down from 34.0% in the prior quarter and down from 32.5% in the same quarter last year.

Gross margin from the solar segment was 32.8%, down from 36.6% in the prior quarter and down from 36.2% in the same quarter last year.

GAAP operating expenses were $119.5 million, up 13% from $106.1 million in the prior quarter and up 25% from $95.9 million in the same quarter last year.

Non-GAAP operating expenses were $94.1 million, up 12% from $83.8 million in the prior quarter and up 29% from $72.9 million in the same quarter last year.

GAAP operating income was $41.0 million, down 38% from $66.4 million in the prior quarter and up 184% from $14.4 million in the same quarter last year.

Non-GAAP operating income was $72.9 million, down 23% from $95.2 million in the prior quarter and up 68% from $43.5 million in the same quarter last year.

GAAP net income was $41.0 million, down 23% from $53.0 million in the prior quarter and up 132% from $17.7 million in the same quarter last year.

Non-GAAP net income was $62.8 million, down 24% from $82.1 million in the prior quarter and up 13% from $55.7 million in the same quarter last year.

GAAP net diluted EPS was $0.74, down from $0.96 in the prior quarter and up from $0.33 in the same quarter last year.

Non-GAAP net diluted EPS was $1.10, down from $1.45 in the prior quarter and up from $0.98 in the same quarter last year.

Cash flow from operating activities was $89.6 million, up from $61.8 million in the prior quarter and up from $27.2 million in the same quarter last year.

As of December 31, 2021, cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities totaled $548.0 million, net of debt, compared to $524.1 million on September 30, 2021.

Full Year 2021 Summary

Total revenues of $1.96 billion, up 34.6% from $1.46 billion in the prior year.

GAAP gross margin was 32.0%, up from 31.6% in the prior year.

Non-GAAP gross margin was 33.5%, up from 33.0% in the prior year.

GAAP operating income was $207.1 million, up 45% from $142.6 million in the prior year.

Non-GAAP operating income was $321.4 million, up 47% from $218.8 million in the prior year.

GAAP net income was $169.2 million, up 21% from $140.3 million in the prior year.

Non-GAAP net income was $272.9 million, up 22% from $224.4 million in the prior year.

GAAP net diluted EPS was $3.06, up from $2.66 in the prior year.

Non-GAAP net diluted EPS was $4.81, up from $4.11 in the prior year.

Cash flow from operating activities of $214.1 million, down from $222.7 million in the prior year.

Outlook for the First Quarter 2022

The Company also provides guidance for the first quarter ending March 31, 2022 as follows:

• Revenues to be within the range of $615 million to $645 million
• Non-GAAP gross margin expected to be within the range of 28% to 30%
• Revenues from solar segment to be within the range of $575 million to $595 million
• Gross margin from solar segment expected to be within the range of 30% to 32%

Conference Call

The Company will host a conference call to discuss these results at 4:30 p.m. ET on Tuesday, February 15, 2022. The call will be available, live, to interested parties by dialing 888-300-0211. For international callers, please dial +1 773-377-9384. The Conference ID number is 5805953. A live webcast will also be available in the Investors Relations section of the Company’s website at: http://investors.solaredge.com.

A replay of the webcast will be available in the Investor Relations section of the Company’s web site approximately two hours after the conclusion of the call and will remain available for approximately 30 calendar days.

About SolarEdge

SolarEdge is a global leader in smart energy technology. By leveraging world-class engineering capabilities and with a relentless focus on innovation, SolarEdge creates smart energy solutions that power our lives and drive future progress. SolarEdge developed an intelligent inverter solution that changed the way power is harvested and managed in photovoltaic (PV) systems. The SolarEdge DC optimized inverter seeks to maximize power generation while lowering the cost of energy produced by the PV system. Continuing to advance smart energy, SolarEdge addresses a broad range of energy market segments through its PV, storage, EV charging, batteries, UPS, electric vehicle powertrains, and grid services solutions. SolarEdge is online at www.solaredge.com

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release, such as non-GAAP net income, non-GAAP net diluted EPS, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP gross margin from sale of solar products. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this release. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. The Company believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release contains forward looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include information, among other things, concerning: our possible or assumed future results of operations; future demands for solar energy solutions; business strategies; technology developments; financing and investment plans; dividend policy; competitive position; industry and regulatory environment; general economic conditions; potential growth opportunities; and the effects of competition. These forward-looking statements are often characterized by the use of words such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negative or plural of those terms and other like terminology.

Forward-looking statements are only predictions based on our current expectations and our projections about future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Given these factors, you should not place undue reliance on these forward-looking statements. These factors include, but are not limited to, the matters discussed in the section entitled “Risk Factors” of our Annual Report on Form 10-K/A for the year ended December 31, 2020, filed on February 19, 2021 and our quarterly reports filed on Form 10-Q, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of February 15, 2022. The Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)
		Three months ended December 31,								Year ended December 31,
		2021				2020				2021				2020
		Unaudited
Revenues		$	551,915			$	358,107			$	1,963,865			$	1,459,271
Cost of revenues			391,424				247,782				1,334,547				997,912
Gross profit			160,491				110,325				629,318				461,359
Operating expenses:
Research and development			64,326				47,513				219,633				163,123
Sales and marketing			33,248				28,872				119,000				95,985
General and administrative			21,879				18,042				82,196				63,119
Other operating expense (income), net			----				1,471				1,350				(3,429	)
Total operating expenses			119,453				95,898				422,179				318,798
Operating income			41,038				14,427				207,139				142,561
Financial income (expense), net			(6,324	)			10,380				(19,915	)			21,105
Income before income taxes			34,714				24,807				187,224				163,666
Income tax benefit (expense)			6,240				(7,152	)			(18,054	)			(23,344	)
Net income		$	40,954			$	17,655			$	169,170			$	140,322

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
		December 31,
		2021			2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	530,089		$	827,146
Marketable securities			167,728			143,687
Trade receivables, net of allowances of $2,626 and $2,886, respectively			456,339			218,706
Inventories, net			380,143			331,696
Prepaid expenses and other current assets			176,992			198,106
Total current assets			1,711,291			1,719,341
LONG-TERM ASSETS:
Marketable securities			482,228			147,434
Deferred tax assets, net			27,572			11,676
Property, plant and equipment, net			410,379			303,408
Operating lease right-of-use assets, net			47,137			41,600
Intangible assets, net			58,861			67,818
Goodwill			129,629			140,479
Other long-term assets			24,963			5,353
Total long-term assets			1,180,769			717,768
Total assets		$	2,892,060		$	2,437,109

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables, net		$	252,068		$	162,051
Employees and payroll accruals			74,465			63,738
Warranty obligations			71,480			62,614
Deferred revenues and customers advances			17,789			24,648
Accrued expenses and other current liabilities			109,379			123,048
Total current liabilities			525,181			436,099
LONG-TERM LIABILITIES:
Convertible senior notes, net			621,535			573,350
Warranty obligations			193,680			142,380
Deferred revenues			151,556			115,372
Finance lease liabilities			40,508			26,173
Operating lease liabilities			38,912			35,194
Other long-term liabilities			10,649			22,784
Total long-term liabilities			1,056,840			915,253
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS’ EQUITY:
Common stock of $0.0001 par value - Authorized: 125,000,000 shares as of December 31, 2021 and December 31, 2020; issued and outstanding: 52,815,395 and 51,560,936 shares as of December 31, 2021 and December 31, 2020, respectively			5			5
Additional paid-in capital			687,295			603,891
Accumulated other comprehensive income (loss)			(27,319	)		3,857
Retained earnings			650,058			478,004
Total stockholders’ equity			1,310,039			1,085,757
Total liabilities and stockholders’ equity		$	2,892,060		$	2,437,109

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except per share data)
		Year ended
		December 31,
		2021				2020
Cash flows provided by operating activities:
Net income		$	169,170			$	140,322
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment			29,359				22,355
Amortization of intangible assets			10,176				9,479
Amortization of debt discount and debt issuance costs			2,903				3,185
Amortization of premium and accretion of discount on available-for-sale marketable securities, net			9,462				1,168
Stock-based compensation expenses			102,593				67,309
Deferred income taxes, net			(12,045	)			(2,738	)
Exchange rate fluctuations and other items, net			20,697				3,860
Changes in assets and liabilities:
Inventories, net			(43,051	)			(149,661	)
Prepaid expenses and other assets			(39,444	)			(3,276	)
Trade receivables, net			(247,723	)			86,538
Trade payables, net			91,709				3,333
Employees and payroll accruals			26,519				18,315
Warranty obligations			60,524				32,274
Deferred revenues and customers advances			29,936				(21,438	)
Other liabilities, net			3,344				11,630
Net cash provided by operating activities			214,129				222,655
Cash flows from investing activities:
Investment in available-for-sale marketable securities			(579,377	)			(223,705	)
Proceeds from sales and maturities of available-for-sale marketable securities			202,188				141,839
Investment in privately-held company			(16,643	)			----
Purchase of property, plant and equipment			(149,251	)			(126,790	)
Withdrawal from (investment in) bank deposits, net			60,096				(54,752	)
Withdrawal from restricted bank deposits			798				25,267
Other investing activities			(2,022	)			1,504
Net cash used in investing activities		$	(484,211	)		$	(236,637	)
Cash flows from financing activities:
Repayment of bank loans		$	(16,073	)		$	(15,595	)
Proceeds from exercise of stock-based awards and payment of withholding taxes			2,203				21,500
Proceeds from issuance of convertible senior notes, net			----				617,869
Proceeds from bank loans			----				16,944
Other financing activities			(1,308	)			(234	)
Net cash provided by (used in) financing activities			(15,178	)			640,484
Increase (decrease) in cash and cash equivalents			(285,260	)			626,502
Cash and cash equivalents at the beginning of the period			827,146				223,901
Effect of exchange rate differences on cash and cash equivalents			(11,797	)			(23,257	)
Cash and cash equivalents at the end of the period		$	530,089			$	827,146

SOLAREDGE TECHNOLOGIES INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (in thousands, except per share data and percentages)
	Reconciliation of GAAP to Non-GAAP
	Three months ended									Year ended
	December 31, 2021			September 30, 2021			December 31, 2020			December 31, 2021			December 31, 2020
Gross profit (GAAP)	160,491			172,561			110,325			629,318			461,359
Revenues from finance component	(122	)		(111	)		----			(418	)		----
Stock-based compensation	4,373			4,289			3,720			18,743			11,082
Cost of product adjustment	----			----			----			----			313
Amortization and depreciation of acquired assets	2,272			2,341			2,374			9,326			9,484
Gross profit (Non-GAAP)	167,014			179,080			116,419			656,969			482,238
Gross margin (GAAP)	29.1	%		32.8	%		30.8	%		32.0	%		31.6	%
Revenues from finance component	0.0	%		0.0	%		----			0.0	%		----
Stock-based compensation	0.8	%		0.8	%		1.0	%		1.0	%		0.8	%
Cost of product adjustment	----			----			----			----			0.0	%
Amortization and depreciation of acquired assets	0.4	%		0.4	%		0.7	%		0.5	%		0.6	%
Gross margin (Non-GAAP)	30.3	%		34.0	%		32.5	%		33.5	%		33.0	%
Operating expenses (GAAP)	119,453			106,147			95,898			422,179			318,798
Stock-based compensation - R&D	(14,872	)		(11,949	)		(8,919	)		(45,424	)		(27,048	)
Stock-based compensation - S&M	(5,882	)		(5,737	)		(8,710	)		(22,834	)		(19,413	)
Stock-based compensation - G&A	(4,076	)		(4,210	)		(2,967	)		(15,592	)		(9,766	)
Amortization and depreciation of acquired assets - R&D	(302	)		(207	)		(14	)		(530	)		(91	)
Amortization and depreciation of acquired assets - S&M	(225	)		(229	)		(230	)		(927	)		(1,187	)
Amortization and depreciation of acquired assets - G&A	(6	)		(8	)		(8	)		(29	)		(33	)
Assets sale (disposal)	18			37			(649	)		117			(1,207	)
Other operating income (expenses)	----			----			(1,471	)		(1,350	)		3,429
Operating expenses (Non-GAAP)	94,108			83,844			72,930			335,610			263,482
Operating income (GAAP)	41,038			66,414			14,427			207,139			142,561
Revenues from finance component	(122	)		(111	)		----			(418	)		----
Cost of product adjustment	----			----			----			----			313
Stock-based compensation	29,203			26,185			24,316			102,593			67,309
Amortization and depreciation of acquired assets	2,805			2,785			2,626			10,812			10,795
Assets (sale) disposal	(18	)		(37	)		649			(117	)		1,207
Other operating (income) expenses	----			----			1,471			1,350			(3,429	)
Operating income (Non-GAAP)	72,906			95,236			43,489			321,359			218,756
	Reconciliation of GAAP to non-GAAP
	Three months ended									Year ended
	December 31, 2021			September 30, 2021			December 31, 2020			December 31, 2021			December 31, 2020
Financial income (expense), net (GAAP)	(6,324	)		(5,751	)		10,380			(19,915	)		21,105
Notes due 2025	727			726			3,017			2,903			3,185
Non cash interest	1,527			1,469			1,305			5,771			4,887
Unrealized gains/losses	(541	)		----			----			(541	)		----
Currency fluctuation related to lease standard	2,422			574			2,172			2,007			2,274
Amortization and depreciation of acquired assets	----			----			----			----			982
Financial income (expense), net (non-GAAP)	(2,189	)		(2,982	)		16,874			(9,775	)		32,433
Income tax benefit (expense) (GAAP)	6,240			(7,615	)		(7,152	)		(18,054	)		(23,334	)
Uncertain tax positions	(9,007	)		----			----			(9,007	)		----
Deferred taxes	(5,181	)		(2,528	)		2,522			(11,639	)		(3,434	)
Income tax benefit (expense) (Non-GAAP)	(7,948	)		(10,143	)		(4,630	)		(38,700	)		(26,768	)
Net income (GAAP)	40,954			53,048			17,655			169,170			140,322
Revenues from finance component	(122	)		(111	)		----			(418	)		----
Cost of product adjustment	----			----			----			----			313
Stock-based compensation	29,203			26,185			24,316			102,593			67,309
Amortization and depreciation of acquired assets	2,805			2,785			2,626			10,812			11,777
Gain (loss) from assets sales and disposal	(18	)		(37	)		649			(117	)		1,207
Other operating (income) expenses	----			----			1,471			1,350			(3,429	)
Notes due 2025	727			726			3,017			2,903			3,185
Non cash interest	1,527			1,469			1,305			5,771			4,887
Unrealized gains (losses)	(541	)		----			----			(541	)		----
Currency fluctuation related to lease standard	2,422			574			2,172			2,007			2,274
Uncertain tax positions	(9,007	)		----			----			(9,007	)		----
Deferred taxes	(5,181	)		(2,528	)		2,522			(11,639	)		(3,434	)
Net income (Non-GAAP)	62,769			82,111			55,733			272,884			224,411
	Reconciliation of GAAP to non-GAAP
	Three months ended									Year ended
	December 31, 2021			September 30, 2021			December 31, 2020			December 31, 2021			December 31, 2020
Net basic earnings per share (GAAP)	0.78			1.01			0.34			3.24			2.79
Revenues from finance component	0.00			0.00			----			(0.01	)		----
Cost of product adjustment	----			----			----			----			0.01
Stock-based compensation	0.55			0.50			0.48			1.97			1.34
Amortization and depreciation of acquired assets	0.05			0.05			0.05			0.21			0.24
Gain (loss) from assets sales and disposal	0.00			0.00			0.01			(0.01	)		0.02
Other operating (income) expenses	----			----			0.03			0.03			(0.07	)
Notes due 2025	0.02			0.02			0.06			0.05			0.06
Non cash interest	0.03			0.03			0.02			0.11			0.10
Unrealized gains (losses)	(0.01	)		----			----			(0.01	)		----
Currency fluctuation related to lease standard	0.04			0.01			0.05			0.04			0.05
Uncertain tax positions	(0.17	)		----			----			(0.17	)		----
Deferred taxes	(0.10	)		(0.05	)		0.05			(0.22	)		(0.07	)
Net basic earnings per share (Non-GAAP)	1.19			1.57			1.09			5.23			4.47
Net diluted earnings per share (GAAP)	0.74			0.96			0.33			3.06			2.66
Revenues from finance component	0.00			0.00			----			(0.01	)		----
Cost of product adjustment	----			----			----			----			----
Stock-based compensation	0.50			0.45			0.44			1.77			1.20
Amortization and depreciation of acquired assets	0.05			0.05			0.05			0.19			0.21
Gain (loss) from assets sales and disposal	0.00			0.00			0.01			0.00			0.03
Other operating (income) expenses	----			----			0.03			0.02			(0.07	)
Notes due 2025	0.00			0.00			0.02			0.02			0.02
Non cash interest	0.03			0.03			0.02			0.10			0.08
Unrealized gains (losses)	(0.01	)		----			----			(0.01	)		----
Currency fluctuation related to lease standard	0.04			0.01			0.04			0.03			0.05
Uncertain tax positions	(0.16	)		----			----			(0.16	)		----
Deferred taxes	(0.09	)		(0.05	)		0.04			(0.20	)		(0.07	)
Net diluted earnings per share (Non-GAAP)	1.10			1.45			0.98			4.81			4.11
Number of shares used in computing net diluted earnings per share (GAAP)	56,011,040			55,929,000			53,496,384			55,971,030			52,795,475
Stock-based compensation	894,079			653,967			865,179			773,636			1,138,517
Notes due 2025	----			----			2,276,818			----			618,701
Number of shares used in computing net diluted earnings per share (Non-GAAP)	56,905,119			56,582,967			56,638,381			56,744,666			54,552,693

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220215006005/en/

Investor Contacts

SolarEdge Technologies, Inc.

Ronen Faier, Chief Financial Officer

+1 510-498-3263

investors@solaredge.com

Sapphire Investor Relations, LLC

Erica Mannion or Michael Funari

+1 617-542-6180

investors@solaredge.com

Source: SolarEdge Technologies, Inc.

FAQ

What were SolarEdge's earnings results for Q4 2021?

SolarEdge reported Q4 2021 revenues of $551.9 million, with a GAAP net income of $41.0 million and diluted EPS of $0.74.

How did SolarEdge perform in the full year 2021?

In full year 2021, SolarEdge achieved record revenues of $1.96 billion, a 34.6% increase from 2020.

What is SolarEdge's guidance for Q1 2022?

For Q1 2022, SolarEdge expects revenues between $615 million and $645 million.

What were the gross margins reported by SolarEdge for Q4 2021?

SolarEdge reported a GAAP gross margin of 29.1% in Q4 2021.